FIRST BUSEY CORP NV

Changes in noninterest expense are summarized as follows for the periods presented(dollars in thousands):

1. The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable financial GAAP measures, see“Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.

Total noninterest expense was $70.8 million for the three months ended March 31, 2024, representing a modest 0.5% increase from the comparable period in 2023. We have effectively managed our noninterest expense during a time of decades-high inflation, and have been purposeful in our efforts to rationalize our expense base given our economic outlook and our view on the future of banking.

Salaries, wages, and employee benefits were $42.1 million for the three months ended March 31, 2024, a 4.4% increase from the comparable period in 2023. Our total associate base consisted of 1,464 full-time equivalents as of March 31, 2024, compared to 1,473 full-time equivalents at March 31, 2023. Current trends continue to reflect a competitive labor market, maintaining pressure on costs related to attracting and maintaining our skilled workforce.

Data processing expense was $6.6 million for the three months ended March 31, 2024, a 16.1% increase from the comparable period in 2023. Increases were primarily attributable to Company-wide investments in technology enhancements, as well as inflation-driven price increases.

Combined, net occupancy expense of premises and furniture and equipment expense totaled $6.5 million for the three months ended March 31, 2024, an 0.4% increase from the comparable period in 2023. Primary cost drivers in these expense categories include lease costs, repairs and maintenance, depreciation expense, real estate taxes, and utilities.

Professional fees were $2.3 million for the three months ended March 31, 2024, a 9.5% increase from the comparable period in 2023. The three months ended March 31, 2024, includes $0.1 of non-operating costs related to the M&M acquisition.

Amortization of intangible assets was $2.4 million for the three months ended March 31, 2024, an 11.7% decrease from the comparable period for 2023, due to the use of an accelerated amortization methodology.

Interchange expense was $1.6 million for the three months ended March 31, 2024, a 13.1% decrease from the comparable period in 2023. Fluctuations in interchange expense relate to payment and volume activity at FirsTech.

FDIC insurance expense was $1.4 million for the three months ended March 31, 2024, a 6.8% decrease from the comparable period in 2023.

Other expense was $7.9 million for the three months ended March 31, 2024, a 19.0% decrease from the comparable period in 2023. In connection with Busey’s adoption of ASU 2023-02 on January 1, 2024, Busey began recording amortization of New Markets Tax Credits as income tax expense instead of other expense, which resulted in a $2.2 million decrease in other expense during the first quarter of 2024, compared to the first quarter of 2023. Further changes in other expense are attributable to multiple items, including the provision for unfunded commitments, sales of other real estate owned, marketing, and business development expenses.

Efficiency Ratio

The efficiency ratio 3, which is a measure commonly used by management and the banking industry, measures the amount of expense incurred to generate a dollar of revenue. Our efficiency ratio was 58.1% for the three months ended March 31, 2024, compared to 56.9% for the three months ended March 31, 2023. Our adjusted efficiency ratio 3 was 61.7% for the three months ended March 31, 2024, compared to 56.9% for three months ended March 31, 2023.

Taxes

The effective income tax rate of 25.0% for the three months ended March 31, 2024, was lower than the combined federal and state statutory rate of approximately 28.0% due to tax exempt interest income, such as municipal bond interest and bank owned life insurance income. The effective tax rate was higher in the first quarter of 2024 compared to previous quarters due to the adoption of ASU 2023-02 in January 2024. We continue to monitor evolving federal and state tax legislation and its potential impact on operations on an ongoing basis. As of March 31, 2024, we were not under income tax examination by any income tax authority.

3 The efficiency ratio and adjusted efficiency ratio are non-GAAP financial measures. For a reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures, see“Item 2. Management’s Discussion and Analysis—Non-GAAP Financial Information” included in this Quarterly Report.